Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 26, 1992 TAG: 9201290306
SECTION: EDITORIAL PAGE: D-3 EDITION: METRO
SOURCE: ALAN SORENSEN
DATELINE: LENGTH: Long
IT'S NOT THE END OF THE WORLD
YOU MAY have noticed we've been calling for tax increases.Higher state taxes, to be specific. In a series of editorials ending today, we have proposed:
Substantially raising Virginia's cigarette and alcohol excise taxes.
Increasing the sales tax (by a half cent) to 5 cents.
Adding a top bracket to the personal income tax.
Have we gone nuts?
I don't think so.
There is, for one thing, a catch: We say the state needs to justify the taxes by reassuring Virginians that the revenues will be well-spent. Taxpayers lack confidence on this point now, with some cause. Richmond will have to reform its act.
But this one - albeit significant - caveat aside, the tax increases we've proposed seem reasonable to me.
They certainly aren't onerous. By national standards, Virginia is a low-tax state, relative to per-capita income.
Its 2.5-cent cigarette tax, unchanged since the 1960s, is the lowest in America. The national average is 20 cents. Texas recently raised its tax to 41 cents.
A 5-cent sales tax wouldn't be the end of the world, especially if the additional revenues were earmarked for education, and low-income Virginians were granted refundable credits - as we have recommended.
Virginia's highest bracket on the income tax now kicks in at only $17,000. Adding one more bracket - taxing income above, say, $100,000 - would make the tax more progressive. And those affected could well afford the higher bill (reduced by the federal deductibility of state taxes).
Besides, the state needs the money. Washington for years has been unloading programs and obligations onto state government that the states can neither afford nor humanely ignore. At the same time, the feds have cut funding for these programs - on everything from nutrition and homeless services to community development, highways and waste-water treatment.
The recession, meanwhile, has sent revenues plummeting while needs expand.
Sure, tax hikes are never welcome. But state employees ought not to go years without salary increases. Virginia shouldn't continue disinvesting in higher education. Progress in the public schools should not be squandered, nor disparity in school funding left uncorrected.
The state has little control over much of its spending; federally mandated Medicaid is a big example. A lot of programs, such as those separating violent criminals from the rest of us, have to be sustained.
And, unlike the federal government, the state has to balance its budget. A lot of one-time accounting gimmicks Gov. Wilder used to balance the budget in 1991 are no longer available this year, in the face of a half-billion-dollar-plus shortfall.
So, yes, darned right I think higher taxes are called for.
But, again, with this caveat: Tax increases aren't justified to fund state government in the way it has been traditionally run. A bigger tax bite has to be accompanied by substantial commitment to reform.
We've suggested, in a general way, some of the necessary improvements:
Greater accountability and oversight on spending, including more measurements of program outcomes.
Campaign-finance and state-budget reforms to assure that the public's good - not special, narrow interests - weigh heaviest in allocating new revenues.
Thoroughgoing change in the management culture of state government - cutting out layers of bureaucracy, decentralizing authority, encouraging innovative ideas for improving service to the public.
Greater emphasis on preventive and investment strategies and on long-term planning: to improve Virginians' health and their work skills, for example, and to prepare the state's economy for reduced federal military spending.
Why not make such changes first, before asking for tax increases? A good question, but not unanswerable.
First, the governor is no spendthrift. He has cut the budget severely; tax increases are more justifiable now for his having done so.
Second, many improvements in governance won't initially save money. For example, reducing the state's long-term welfare burden will cost more at the outset - to pay for child care and job training to help the poor escape dependence.
Third, the state can't wait to perform some services, can't afford to continue deferring investment in others. If Virginia puts off addressing school-funding disparity, another crop of students will suffer. So will the work force when they graduate.
We sometimes face, in taking editorial positions, a conflict between two desires: to argue the merits of an ideal course, and to be taken seriously. In the case of our tax proposals, I imagine some people's reaction is dismissive and derisive.
But perhaps a more critical look at the supposedly real-world political consensus is needed. Already, cracks have appeared in the conventional wisdom that any tax increases are beyond the pale. Budget hearings witnessed an outpouring of protest against further cutbacks. Wilder has proposed an assessment on health-care providers; the assembly is considering increases in the cigarette, sales and income taxes.
Maybe the governor and some lawmakers, so attuned to the taxophobic consensus, need to confront the unreality of their views, need to consider the harm their evasion of leadership is causing the commonwealth.
We're not suggesting that the state tax us into oblivion. What we're calling for in aggregate would constitute only a moderate level of taxation in Virginia, compared with other states. And most of the increase would be earmarked for education. With public investments guided by long-range planning and held accountable to measures of effectiveness, Virginia could count on economic growth sufficient, perhaps, to render future tax increases unnecessary.
If, on the other hand, the state fails to raise revenues needed for initiatives that might control future costs and generate future wealth, it will go broke. It will be swallowed up by Medicaid and the prisons - while education, infrastructure, economic development, human services and other public responsibilities are left to wither.
That's the prospect the reflexive no-tax crowd offers, even after economic recovery comes: a future of deteriorating government services, continued fiscal crises, and bitterly resisted tax increases.